Kindle 2 can read books aloud. And Kindle 2 is not paying anyone for audio rights. True, you can already get software that will read aloud whatever is on your computer. But Kindle 2 is being sold specifically as a new, improved, multimedia version of books–every title is an e-book and an audio book rolled into one. And whereas e-books have yet to win mainstream enthusiasm, audio books are a billion-dollar market, and growing. Audio rights are not generally packaged with e-book rights. They are more valuable than e-book rights. Income from audio books helps not inconsiderably to keep authors, and publishers, afloat….You may be thinking that no automated read-aloud function can compete with the dulcet resonance of Jim Dale reading ‘Harry Potter’ or of authors, ahem, reading themselves. But the voices of Kindle 2 are quite listenable….And that sort of technology is improving all the time….no part of my voice is competing with my own audio books yet. But people who want to keep on doing creative things for a living must be duly vigilant about any new means of transmitting their work.”

Ah.

The crux of Blount’s argument, then, is not so much that the roboticized nondramatic book readings of the Kindle threaten the audio book market today, but that they will in the future when they better approximate the human voice. We must be vigilant about any news means of transmitting our work. And given that, wouldn’t it be prudent to rethink the way authors license and profit from their work? That seems a reasonable point and one worth discussing. After all, we’ve seen this situation time and time again, all the way back to John Philip Sousa and player piano music rolls. In fact, if you think about it, the Kindle’s text-to-speech function is a sort of player piano for books. And if you take that view, these words from Sousa, penned back in 1906, still resonate today:

For the life of me I am puzzled to know why the powerful corporations controlling these playing and talking machines are so totally blind to the moral and ethical questions involved. Could anything be more blamable, as a matter of principle, than to take an artist’s composition, reproduce it a thousandfold on their machines, and deny him all participation in the large financial returns, by hiding back of the diaphanous pretense that in the guise of a disk or roll, his composition is not his property?

Do they not realize that if the accredited composers, who have come into vogue by reason of merit and labor, are refused a just reward for their efforts, a condition is almost sure to arise where all incentive to further creative work is lacking, and compositions will no longer flow from their pens; or where they will be compelled to refrain from publishing their compositions at all, and control them in manuscript?  What, then, of the playing and talking machines?”

What then of the Kindle?

“[The Kindle's text-to-speech function] presents a significant challenge to the publishing industry,” the group said in a statement released Thursday. “Audiobooks surpassed $1 billion in sales in 2007; e-book sales are just a small fraction of that. While the audio quality of the Kindle 2, judging from Amazon’s promotional materials, is best described as serviceable, it’s far better than the text-to-speech audio of just a few years ago. We expect this software to improve rapidly….we recommend that if you haven’t yet granted your e-book rights to backlist or other titles, this isn’t the time to start. If you have a new book contract and are negotiating your e-book rights, make sure Amazon’s use of those rights is part of the dialog. Publishers certainly could contractually prohibit Amazon from adding audio functionality to its e-books without authorization, and Amazon could comply by adding a software tag that would prohibit its machine from creating an audio version of a book unless Amazon has acquired the appropriate rights. Until this issue is worked out, Amazon may be undermining your audio market as it exploits your e-books.”

Hard to view the sort of roboticized nondramatic “reading” that the Kindle provides as a “significant challenge to the publishing industry.” If that was truly the case, you’d think the industry would have gone after Apple (AAPL) for VoiceOver (could it’s “Hysterical” and “Zarvox” voice options be any more realistic?) Beyond that, the idea of derivative rights and royalties for text-to-speech just seems ludicrous.

“When you buy a book, you’re also buying the right to read it aloud, have it read to you by anyone, read it to your children on long car trips, record yourself reading it and send that to your girlfriend etc.,” says author Neil Gaiman “This is the same kind of thing, only without the ability to do the voices properly, and no-one’s going to confuse it with an audiobook. And that any authors’ societies or publishers who are thinking of spending money on fighting a fundamentally pointless legal case would be much better off taking that money and advertising and promoting what audio books are and what’s good about them with it.”

Shares in the company, which have already lost more than 20% of their value in 2008, slipped further in early trading (but recovered later), though Amazon said yesterday that profits more than doubled in its fourth quarter. “This quarter showed accelerated sales growth and record operating profits,” CEO Jeff Bezos said in a statement released with the earnings. “In our view, these unusual financial results are driven by one thing: continuously improving the customer experience.”

But such enthusiastic pronouncements didn’t matter a whit to jittery investors worried about a slowing economy and Amazon’s tight margins. Shares of the retailer, which closed yesterday at $74.21, fell 8.2% to $68.15 before opening bell today. And they slipped even further, to $66.49, after Amazon announced plans to acquire Audible in a deal valued at about $300 million – a premium of more than 20 percent over the audiobook retailer’s Wednesday closing price.

Perhaps investors haven’t yet realized that Audible controls an astonishing 95% of the online audiobook market and, as Staci Kramer over at paidContent notes, is the top spoken-word provider for Apple’s iTunes Store. Amazon almost certainly plans to distribute Audible content wirelessly via its Kindle e-book reader, which may turn it into the iPod of e-book readers whether Apple CEO Steve Jobs likes it or not. “It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore,” Jobs said recently when asked about the Kindle. “Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.”

That may be so, but as Jobs well knows they do listen. Which begs the question: Why didn’t Apple buy Audible? “We have long suspected that Apple would be the party most interested in acquiring Audible, considering the close ties between the two companies,” Richard Fetyko, an analyst with Merriman Curhan Ford, wrote in a research note this morning. “Audible’s audiobook content is sold within Apple’s iTunes online music store, which represents about 25% to 30% of Audible’s revenue. Also, most of Audible’s customers are iPod users. We would not be surprised to see [if] Apple made a bid for Audible to preserve its leadership in online-audio content distribution. There are no alternatives to Audible in the marketplace with any significant scale.”